The Beauty Of Operational Leverage In Running A Business

by in Lifestyle on Dec 9th, 2013

I recently finished up my annual business offsite in Oahu and I wanted to highlight one thing everyone in the blogging business should do once a year.

Calculate your year over year top line revenue growth and compare that figure to your year over year operating profit figure. If you have been growing, hopefully you should see a much bigger operating profit growth rate than your revenue growth rate. This is what we call Operational Leverage in finance.

The internet business is my favorite business because the world is our potential demand curve and our costs are largely fixed. If we are able to grow revenue, more and more of our bottom line profits flows into our pockets as a result. It only costs ~$20 a year to own your domain, $20-$250 a month for web hosting, and $100 – $3,000 a year for maintenance and design work. After that, all other expenses are discretionary.

To give you a simple analogy let’s look at property. If your property is in an upcycle as we are now, every 1% increase in your property price is like a 5% increase in your overall equity if you put 20% down. Property is my absolute favorite asset class to build wealth in an upcycle. In a downcycle, property is a terrible investment and you shift your mindset from being an investor to being an inhabitant. Hopefully everybody has a decent portion of their net worth in risk-free investments to play defense when bad times return.


Don’t Confuse Being A Freelancer With Being A Blogger And Vice Versa

by in Lifestyle on Aug 5th, 2013

The terms “blogger” and “freelancer” are often used interchangeably to describe ourselves, but it’s important to differentiate between the two to minimize disappointment and maximize profitability. One can certainly be a blogger with a freelance business or a freelancer with a blog. However, to do one successfully requires a different skillset.

I’m a blogger first with some services I offer to anybody or any business looking to develop a presence online or seek help with their personal finances. However, such services are not my main focus as I limit my clientele to four a month maximum. The reason why I limit my consulting is because I mainly want to write, which is my joy. If I wanted to work, I wouldn’t have retired!

Whether my writing makes money or not is secondary to being able to share some thoughts and interact with the community. It’s always going to be this way. The thrill of getting picked up by some major media organization or doing an interview on a public radio station is addicting. So is learning about different perspectives from readers all around.

As it turns out Financial Samurai generates enough income to eat ramen noodles in San Francisco. But again, this is a side product because I’m currently living off my passive income streams in CD interest, dividends, and rental income. Everything generated from my blog is a bonus.

Despite four years of blogging, I’m still struggling immensely with selling a product or myself. I just don’t enjoy the process of trying to make money from readers and am seriously considering outsourcing the work to a freelancer.


The Emotional Side Of Starting A Business

by in Lifestyle on Jul 29th, 2013

I don’t consider myself a serial entrepreneur, but over the past few years, I’ve tried starting a few websites as attempts to build side businesses apart from my personal finance blog. Most flamed out before opening up to real business, but instead of focusing on the problems of each business plan, I’d rather focus on the emotional side of starting a business.

Right now I am in the process of launching a new side business: a carnival submission service. I’m not the first person to offer this service, but I am very confident that the service I am offering is the best.

However, offering the best service is just a small part of the equation and I’m well aware of that. I have teamed up with another friend/blogger, David from Financial Nerd (he’s also a programming nerd) to make this a reality. We plan on blowing away the competition (other blogger friends, so hopefully it will be a friendly competition) by submitting to a much wider range of carnivals than what’s currently out there, offering more options, and doing it all at a fantastic price. Eventually, we plan on casting a wider net and targeting non-personal finance blogs, too.

Launching a business is scary, though. There are plenty of things that could go wrong, including technical issues. Everyone has experienced technical issues, whether with a presentation at work or with their blog being attacked. However, there are several things that scare me about this specific launch that has nothing to do with the service working (which it does, I’ve tested it plenty).

What Makes Me Worry About Launching Read More

Is The Internet A True Meritocracy?

In Search For A Correlation Between Effort And Success

by in Lifestyle on Mar 27th, 2013

A lack of a meritocratic environment is the number one reason why so many people are dissatisfied with their jobs based on research conducted for my book. There’s nothing more maddening than when someone less deserving is promoted over you due to politics instead of performance.

One of the main reasons why I left finance was because there was no correlation between performance and compensation anymore. In the past, if you made the firm X, you would be compensated X times a certain percentage. Given all the new rules by various governments as well as the need for profitable divisions to subsidize less profitable divisions, we all got paid roughly the same no matter how well we delivered. Working in a Socialistic style environment is fine if you’re not very motivated or are an underperformer. However, at the age of 34, I still had plenty of fight left, so I left.

Entrepreneurship is about as close as it gets to a meritocracy as it gets. All your wins and loses are due to your own efforts. If you don’t work, you don’t eat. It’s as simple as that. However, even with entrepreneurship, not everything is as meritocratic as it seems. If you so happen to have Ron Conway, the billionaire father of Angel Investing on speed dial, and Marissa Mayer, the CEO of Yahoo as your wife, chances are higher you will succeed.

Even though I wrote about how to buy your way to online success, I’m pretty much against buying myself into anything. I only wrote the post to highlight the other side of the story. It feels empty when you don’t build something on your own. Some would liken  it to cheating.

Given entrepreneurship has some flaws in the pure meritocracy argument, I’d like to drill down even further and talk about becoming a successful online publisher. I’ll share my views as well as several other views from Yakezie Members.


A Successful Online Business Is All About Creating Strong Partnerships

The Online Entrepreneur's Life

by in Lifestyle on Feb 25th, 2013

What makes someone successful? Can anyone really do it alone?

If you go back to the Presidential election, there was a big debate about self vs. community, and how much the government really helps businesses. Without getting political, the overarching message is that nobody does anything alone.

Everything is life is about building partnerships…even if you don’t call it that specific word. You could say relationships, acquaintances, friends, family… the bottom line is that you need a group of people to support you in everything you do.

Why Partnerships Matter Online Read More

How To Make Money Quitting Your Job
  • Financial Samurai: Hi Chuck, I will have to visit you one day. Sounds like a wonderful life. Ever get island fever...
  • maria@moneyprinciple: Wonderful post and very, very glad to have you with us, Chuck. Keep hustlin’, keep well...
  • krantcents: Congratulation completing the challenge. Savings was and is my number one priority. I will have to switch...
  • Brian@Luke1428: Congrats on completing the challenge Chuck! And I’m not only talking about Yakezie. Can’t...
  • AverageJoe: Awesome post. Happy to get to know you better. Love your 16 points strategy. You’re right: simple...
  • Zee: Congrats on completing the challenge. I’m curious since you brought it up, (also because I’m just...
  • maria@moneyprinciple: Welcome, Marvin; well done for completing the challenge. Keep going and shall be seeing you...
  • moneystepper: Thanks Pauline. That’s good news – it means I’m a sure thing to succeed now!! ;)
  • Brian@Luke1428: “…might consider me competition…” Haha…I thought this as well. I...
  • Pauline: Welcome Brian, and well done on the team work. You guys are lucky to have each other.

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